Retail Issue
Counterfeiting Cannabis
Seed-to-Sale Traceability
In the April Retail Issue we have articles related to packaging, counterfeiting, seedto-sale traceability in cannabis labelling, and much more.
In 2019 alone, there was an estimated US$509 billion worth of counterfeit products on the global market. Given that high figure, it’s no surprise that counterfeiting has just about hit every industry, and cannabis is no exception.
As one of the most robust and organized cannabis programs in the world, software strategies can enable better seed-to-sale traceability throughout Canada and help cannabis organizations grow.
Cannabis Prospect Magazine
VOLUME 3 ISSUE 2
YOUR SEED-TO-SALE PUBLICATION FOR THE CANADIAN CANNABIS MARKETPLACE
LOOP/POOL CANNABIS
CANADIAN ARTISTS JOIN THE LOOP/POOL MISSION TO UNLOCK THE POTENTIAL OF CANNABIS TO HELP FUND AND EMPOWER THE NEXT GENERATION OF ARTISTS
OUR LADY PEACE BLUE RODEO STARS FELIX CARTAL DVSN KIESZA ROY WOODS
APRIL 2021
THE PRE-ROLL OF INTERIORS.
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Table of Contents/
April 2021
COVER STORY
RISK MANAGEMENT
BLOCKCHAIN
US VAPE LEGISLATION
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Our Lady Peace, Blue Rodeo, Stars, Felix Cartal, Dvsn, Kiesza and Roy Woods have joined LOOP/POOL to drive initiatives that help and support Canadian artists who are further struggling during the pandemic.
The big story for 2021 is the evolution of the industry – and the pain points looming ahead. At the same time, consumers’ preferences are maturing. No longer are customers focused solely on THC percentages.
Robert Galarza is the Chief Executive Officer and Director at TruTrace Technologies, and he’s at the forefront of leveraging blockchain to help the cannabis industry. His efforts are garnering a lot of attention from both the industry and the stock market.
Canadian vape hardware providers wanting to engage in the U.S. market will face new challenges shipping products and complying with strict new reporting requirements.
ON THE COVER REGULARS
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In the April Retail Issue we have articles related to packaging, counterfeiting, seed-to-sale traceability in cannabis labelling, and much more.
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Counterfeiting is the most dangerous criminal enterprise in the world. In 2019 alone, there was an estimated US$509 billion worth of counterfeit products on the global market. Given that high figure, it’s no surprise that counterfeiting has just about hit every industry, and cannabis is no exception.
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From the Editor Events News Provincial Updates Product Showcase Appointments List of Advertisers
As one of the most robust and organized cannabis programs in the world, software strategies can enable better seed-to-sale traceability throughout Canada and help cannabis organizations grow and gain a competitive advantage in 2021 and beyond.
April 2021 | Cannabis Prospect Magazine
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LETTER TO THE EDITOR
How Times Have Changed By David Halpert
T
he following is a true story that happened roughly three years before Canadian cannabis legalization. A friend of mine told me of a medical dispensary downtown that was quality when it came to product but, shall we say, more inclusive when it came to treating more to than just patients. So throwing caution to the wind I decided to venture to Kensington Market to see for myself. In the years prior to legalization, medical dispensaries had a more established presence in highly-populated urban centres. However many of them were of the “pop-up” variety, able to open up and close shop should cops get wise to their operations. This dispensary in particular looked like any cannabis retailers today: clean, knowledgeable, much of its product attractively on display. As I approached the counter, a woman was there to greet me with a warm smile and friendly disposition. I asked to buy some cannabis to which she replied “Do you have a prescription?” I answered truthfully no I hadn’t. Now before you could buy cannabis “legally” at a dispensary, you had to become a member of the clinic first. At this point, she handed me an Ipad and put me on a Skype session with a man in a white labcoat that may or may not have been a doctor. He asked me a series of questions, chief among them, what medical conditions I suffered from and, thinking on the fly, I said, “social anxiety”, which was true in a sense, but not to the point where I would legally consider it a condition. Ten minutes later, I became a member of the clinic and BOOM I received my cannabis. See, if you didn’t buy your cannabis from a dealer or grow it yourself, it was likely you purchased it illegally from one of the hundreds of medical dispensaries peppered throughout Canada (illegal in the sense that you weren’t technically a patient).
For many, this story isn’t unique when it came to purchasing cannabis back in the day. Sure, the circumstances might be different, but the situations are pretty similar. Now when you think about it, many young people today (and for those for discovering the benefits of cannabis later in life) will never know the experience of buying cannabis illegally in this fashion, of driving out at midnight in the middle of January to meet a guy who dealt out of his Toyota Camry, or some such. It occurs to me that in as little as five to 10 years there will be a large swatch of teenagers as well as those in their 20s and 30s who will never have known the experience of purchasing marijuana “from a guy” or “from a friend” (people of a certain age will also remember at one point in time it was legal to smoke in restaurants, or the time when most stores were closed on Sunday across this country depending on what generation you belong to, The Lord’s Day Act they called it). Looking back, now three years later and thousands of legal cannabis stores in operation across Canada, those days feel like the Stone Age by comparison, or a bygone age lost in the sands of time. And this is just the beginning. To commemorate this new era, we have devoted our April issue specifically to retail. As such, in this April issue, you will find articles related to counterfeiting in the cannabis industry, seed-tosale traceability in labeling, risk management, and much more.
President / CEO, Straight Dope Media Inc. @cannabispromag
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Cannabis Prospect Magazine | April 2021
MONSTER FLOWER, USED FROM 2ND TO THE 5TH WEEK OF BLOOM/FLOWERING.
Monster Flower, this flower expansion compound was developed and created for the expansion of flower bud sites and flower buds, essential for the desire of high yields. MONSTER BLASTER, USED IN THE 5TH AND 6TH WEEK OF BLOOM/FLOWERING.
Monster Blaster is engineered to increase and amplify the number and size of flowers the plant produces. MONSTER K, FINAL PUSH USED IN WEEKS 7 & 8.
Monster K provides a high level of potassium critical in the final push of the plant. *Can also be used for supplemental potassium just before flowering is finished. Use as above for maximum results.
CONFERENCES & EVENTS April 26-28, 2021 Growing Summit (Online) Proudly managed by Hempfest Canada, HFC Productions Inc. www.growingsummit.com
June 8-10, 2021 GCI Virtual Summit (Online) Proudly managed by Global Cannabis Intelligence www.gcivirtualsummit.com
2021 O’ CannaBiz Conference & Expo The International Centre Toronto, ON http://ocannabiz.com/toronto
May 17-19, 2021 C45 Summit (Online) Proudly managed by Hempfest Canada, HFC Productions Inc. www.c45summit.com
October 5-7, 2021 Grow-Up Conference & Expo Location TBD Niagara Falls, ON http://growupconference.com
2021 Grow-Up Conference & Expo Location TBD Victoria, BC http://growupconference.com
May 26-27, 2021 Womxn, Wellness & Cannabis Conference (Online) Proudly managed by Marigold PR https://wwcconference.com
Nov. 19-21, 2021 Lift & Co. Cannabis Expo Toronto Metro Convention Centre Toronto, ON http://liftexpo.ca/expotoronto
To submit an event for inclusion in the Cannabis Prospect Magazine calendar, email media@cannabisproonline.com
Cannabis Prospect Magazine CANNABIS PROSPECT MAGAZINE VOL. 3, ISSUE 2 SUBSCRIPTION SERVICES For subscription services visit www.cannabisproonline.com or email david@cannabisproonline.com. For change of address, please include the old address and new address, along with an address label from a recent issue, if possible. If an address is not updated when the magazine is mailed, we are not responsible for delivery of your magazine. If the Post Office alerts us that your magazine is undeliverable, we will suspend our subscription until a correct address is received.
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EDITORIAL For editorial submission requests or article ideas please email media@cannabisproonline.com Cannabis Prospect Magazine assumes no responsibility for any claims or representations contained in the magazine or in any advertisement. All materials contained are for educational purposes and intended for the legal marijuana business. Cannabis Prospect does not encourage the illegal use of any of the products contained within. ISSN 2562-1033. CANADIAN PUBLICATIONS MAIL PRODUCT AND SALES AGREEMENT NO. 43596516
Cannabis Prospect Magazine | April 2021
Publisher and Editorial Director David Halpert Vice President, Marketing Director Cliff Persaud Account Representatives AJ Welsh & Saad Uddin Cannabis Prospect Magazine is published six times a year by Straight Dope Media Inc., 44 Valleywoods Road, Unit 1802, Toronto Ontario M3A 2R6 Canada ADVERTISING For advertising rates or inquiries please email sales@cannabisproonline.com
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News/
Mood Ring™ by Neptune Wellness Solutions Inc. Now Available in Ontario Neptune Wellness Solutions, Inc., a diversified and fully integrated health and wellness company focused on natural, plant-based, sustainable and purpose-driven lifestyle brands, announced that its cannabis brand Mood Ring™ is now available through the Ontario Cannabis Store (OCS), the wholesaler and online retailer of non-medical cannabis throughout the province. The initial portfolio consists of non-GMO and environmentally friendly packaged products: High CBD Oil, Legacy Hashish, and High CBD Capsules. Mood Ring™ High CBD Oil and High CBD Capsules benefit from a patented cold ethanol extraction process, which creates a full spectrum concentrate that preserves terpenes to retain its earthy aroma and flavour. Aligned with Neptune’s commitment to sustainability, the methodology requires significantly less energy than CO2 extraction, empowering Neptune to minimize its carbon footprint. Dr. Toni Rinow, Neptune’s Chief Financial Officer and Global Operating Officer, added: “We are driven to create products that support our customers’ ever changing needs. Our goal is to be innovative and to harness the super ingredients that are cannabinoids.”
Aphria and Tilray Announce Launch of www.aphriatilraytogether.com Aphria Inc., a global cannabis-lifestyle consumer packaged goods, and Tilray, Inc., a global pioneer in cannabis research, cultivation, production and distribution, announced the launch of the website: www. aphriatilraytogether.com. This new, dedicated resource seeks to provide shareholders of both companies with pertinent information, news and updates leading up to the special meetings of shareholders at which Aphria’s and Tilray’s respective shareholders will vote on the resolutions necessary to implement the proposed business combination of the two companies. The website will also allow shareholders and other interested parties to register for transaction updates that are made publicly available, so they receive information directly to their e-mail addresses. The closing of the transaction is expected to occur in the second quarter of calendar year 2021. HEXO Corp. has Acquire Zenabis Global HEXO Corp. has entered into a definitive arrangement agreement under which HEXO will acquire, by way of court-approved plan of arrangement under the Business Corporations Act (British Columbia), all of Zenabis’ issued and outstanding common shares in an all-share transaction valued at approximately $235 million. Under the terms of the Arrangement Agreement, Zenabis shareholders will receive 0.01772 of a HEXO common share in exchange for each Zenabis common share held. The Transaction was unanimously approved by the board of directors of each of HEXO and Zenabis (in the case of Zenabis’ board of directors, after receiving the unanimous recommendation of a special committee formed for purposes of the Transaction), and Zenabis’ board of directors unanimously recommends that its shareholders vote in favour of the Transaction.
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Sugarbud Expands Supply Agreement with Yukon Liquor Corporation & Announces Sales Agency Partnership With Velvet Management Inc. Sugarbud Craft Growers Corp. has signed a definitive supply agreement with the Yukon Liquor Corporation (YLC) for the sale and distribution of Sugarbud’s Craft Cannabis Collection to private cannabis retailers in the Yukon. YLC is responsible for the wholesale distribution of non-medical cannabis to private retailers and is the public retailer of non-medical cannabis throughout the territory, under the brand Cannabis Yukon. Sugarbud Craft Growers Corp. is also pleased to announce that it has partnered with Velvet Management Inc. (Velvet) to be its exclusive national sales and distribution agent for the Company’s Craft Cannabis Collection. Pursuant to the partnership, Velvet will be primarily responsible for store level sales representation, brand advocacy and budtender education to drive wider distribution of the Company’s Craft Cannabis Collection in key target markets nationally. Pathway Health Corp. and Geocann Form Strategic Partnership to Supply VESIsorb® Formulated Medical Cannabis Products to Leading Retail Pharmacy Brands throughout Canada Pathway Health Corp. announced a strategic partnership with Geocann that will bring VESIsorb® formulated products to the forefront of the rapidly evolving medical cannabis programs of leading Canadian pharmacies. Pathway, formerly The Clinic Network Canada Inc., owns and operates the largest chronic pain telehealth network in Canada, and has recently expanded its business model by finalizing agreements with some of the largest national retail pharmacy companies in Canada. Key elements of these agreements include a full-service collaboration, from
Cannabis Prospect Magazine | April 2021
pharmacist education programs to patient fulfillment of science-backed medical cannabis products. Pathway and Geocann also have a keen focus on education initiatives that are aimed at reaching the approximately 42,000 licensed pharmacists working in more than 10,000 pharmacies. These include traditional Canadian Council on Continuing Education in Pharmacy (CCCEP) accredited bilingual programs and on-boarding tools such as the Medical Cannabis Management Program for Pharmacists. Eteros Expands Mobius and Triminator Operations in the U.S. with Opening of Las Vegas Facility Canada-based Eteros Technologies, owner of Mobius Trimmer, a leading manufacturer in trimming equipment, has opened its first U.S. facility in Las Vegas. The new facility has several primary functions, including final assembly of Mobius and Triminator equipment for the U.S. cannabis market, as well as warehousing and logistics. The new Mobius facility is also creating well-paying, permanent jobs for Nevadans that offer industry-specific training and opportunities for advancement in the fast-growing company. Parent company Eteros plans to initially hire 12 full-time employees for the Las Vegas facility, with additional job opportunities as the company continues to grow. Job seekers are encouraged to visit the Eteros careers page at www.eteros. com/careers/ for more information. HEXO Corp Wins Complete Dismissal of US Federal Shareholder Class Action HEXO Corp announced that it has won a complete dismissal in the federal US securities class action pending in the United States District Court for the Southern District of New York. As previously disclosed, HEXO and its current and former officers and directors were named in shareholder class action lawsuits
Vitalis Extraction Technology Adds Cosolvent Injection System to Its Premium Fleet of Extraction Solutions
The global leader in CO2 extraction solutions, Vitalis Extraction Technology, Inc. (Vitalis) announced the introduction of its latest innovation, the Cosolvent Injection System (CIS). The patent-pending technology delivers the purities of CO2 extraction process while leveraging the power of ethanol to significantly reduce runtime and operational costs, as well as improve post-processing.The novel Vitalis cosolvent option provides flexibility that extractors need to expand their operations and grow their product lines. Compared to with CO2 extraction using conventional winterization methods, or a cold ethanol extraction, the cosolvent process significantly reduces the volume of ethanol used for each gram of oil produced. Engineered as a plug-n-play add-on rather than alteration to CO2 extraction equipment, the Vitalis CIS design allows for continued operation of Q-series and R-series equipment for mono-solvent CO2 processing when desired.
filed in the Southern District of New York, the New York State Supreme Court for the County of New York, and the Province of Quebec. The suits alleged that HEXO made material misstatements and omitted material information in its prior disclosures to investors regarding various issues, including but not limited to its estimated sales revenues during Q4 2019 and fiscal year 2020, its supply agreement with the SQDC, and the facilities acquired from Newstrike. The Valens Company Closes Acquisition of LYF Food Technologies Inc. and Enters Edibles Category with Soft ChewS The Valens Company Inc., a manufacturer of cannabis products, announced the closing of its previously announced acquisition of all of the issued and outstanding shares of LYF Food Technologies Inc. The cash and share transaction totaled CDN$24.9 million payable on closing, plus approximately CDN$17.5 million in post-closing consideration subject to achieving certain earn-out EBITDA milestones. With this acquisition of LYF, Valens has accelerated its footprint in the edibles category, which is one of the fastest-growing segments of the Cannabis 2.0 and 3.0 markets. With the addition of the LYF facility, the Company now has the capability to produce a wide range of edible products in various formats and dosages as part of its central platform. The added product development and manufacturing flexibility makes the platform easily adaptable to evolving consumer preferences and changing market regulations around edible products as Valens looks to expand both in Canada and globally. VIVO Announces EU-GMP Certification VIVO Cannabis Inc. announced that its Vanluven facility in Napanee, Ontario has received EU-GMP (European Union Good Manufacturing Practices) certification from
Germany’s Brandenburg health authority, the Landesamt für Arbeitsschutz, Verbraucherschutz und Gesundheit (LAVG). The certification takes effect immediately and enables VIVO, through its ABcann Medicinals subsidiary, to export product for sale into European and other markets requiring products to be manufactured under the rigorous GMP standards. At the same time VIVO’s German subsidiary Beacon Medical Germany GmbH received an import licence from the authority to import medical cannabis flowers from Napanee to Germany and the EU. High Tide Expands Ontario Footprint with First Canna Cabana Retail Cannabis Store High Tide Inc., a retail-focused cannabis corporation, announced that the Canna Cabana retail store located at 760 Hyde Park Road in London, Ontario has begun selling recreational cannabis products for adult use. This represents High Tide’s 76th branded retail location nationwide, and its first store to commence operations in Ontario’s sixth largest urban centre. The City of London is a growing community of more than 380,000 people situated in the heart of southwestern Ontario and is home to the prominent Western University and Fanshawe College campuses. “The London Store expands our retail footprint into an exciting new market for High Tide and reinforces our strong position as a leading retailer in Canada’s most populous province,” said Raj Grover, President & Chief Executive Officer of High Tide. Mariwell Commences Second Cannabis Cultivation Season Mariwell, a licensed producer of boutique sungrown cannabis, announced it had broken ground for its second year of cultivation.This season will see the recreational and medical grower expand on its early success, applying innovative and sustainable organic growing practices to highly sought-after cultivars. With deep-rooted passion, agricultural expertise
and a location ideally suited for cultivation, Mariwell is uniquely positioned to meet soaring demand for environmentally friendly cannabis. Mariwell believes producing the finest cannabis is an art, supporting superior genetics with the best natural conditions for high-quality growing. CORRECTIONS “I am reaching out today because I wanted to point out an error in your recent article ‘The Rise of Cannabis Concentrates.’ In the article Live Rosin is listed as being BHO (or PHO) made using live, fresh cannabis. This is inaccurate as a description because Live Resin is made from live, freshly frozen cannabis, which is then processed using hydrocarbons; on the flip side, Live Rosin is made from live, freshly harvested and frozen cannabis, but then pressed to extract the oils instead. The nomenclature used in the article was inaccurate, as shown above, but further description in regards to being fresh frozen was also missed. Thank you for taking the time to read this. Carlos Negraeff, Manager - Riverbend Sweet Tree Cannabis Co. In the February ‘21 issue the dates for the Lift & Co. Toronto Expo were incorrectly listed as May 27-30. In late March, this was changed to November 19-21, 2021. Cannabis Prospect Magazine was using the most up-to-date information at the time and apologizes for the error.
Have a news release? Send it to us. Forward to media@cannabisproonline.com
April 2021 | Cannabis Prospect Magazine
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HOW MUCH COUNTERFEITING IS IN THE CANNABIS INDUSTRY CURRENTLY? By Patrick White, CEO, VerifyMe
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ounterfeiting is the most dangerous criminal enterprise in the world. In 2019 alone, there was an estimated US$509 billion worth of counterfeit products on the global market. Given that high figure, it’s no surprise that counterfeiting has just about hit every industry, and cannabis is no exception. As people spend more time at home during the pandemic, they’re changing spending habits and making more e-commerce purchases. An increase in online sales creates new opportunities for counterfeiters to market and sell fake goods – attracting shoppers with cheaper, and potentially harmful goods, to turn a profit. Unfortunately, last year, 66% of THC vapers became ill after using cartridges sold by a counterfeit company with easily-replicable packaging. From cannabis and vape cartridges to CBD products, edibles and paraphernalia, counterfeiting is not only risking the health and safety of consumers, but also disrupting brand revenue and loyalty. Are cannabis retailers and distributors taking measures to protect against fraud? If so, what are they doing? If not, what should they be doing? We’re working with several global cannabis distributors and retailers to help minimize counterfeiting. Our track and trace technology helps brands identify counterfeit goods and supply chain disruptions. In addition to taking reactive measures, our tools also help businesses implement proactive protection strategies. For brands that aren’t working with tech providers to track and confirm the authenticity of their goods, they’re making a huge mistake that could affect both their bottom line and reputation. This goes for all industries – medical devices, beauty products, pharmaceuticals, food and beverage and more. Businesses should be implementing proactive measures that not only guarantee authenticity, but work to boost customer engagement and loyalty – thus driving sales. How does VerifyMe’s tracking & tracking technology target counterfeit goods? VerifyMe’s labels and QR codes are fixed onto packaging and products to help brands take proactive measures against protecting goods. Our
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packaging technology prints invisible ink directly on a product label that can be easily scanned by a brand representative or inspector in the same way you’d scan a visible QR code. Once the invisible ink is scanned, it brings the brand representative or inspector to a private site that authenticates the product. On the consumer side, VerifyMe also creates visible package labeling that allows customers to authenticate the product with a smartphone, engages customers to explore new products, view promotions and provide feedback on their experience. This helps brands and consumers feel enhanced security and peace of mind, while businesses are able to improve customer engagements. If a cannabis distributor is faced with a counterfeiting attack, what are the implications and impact? The primary implication is the potential harm to consumer health and safety. If consumers are ingesting or inhaling a counterfeit cannabis product, it could put their health – even their life – at serious risk. Fraudsters could potentially be swapping legitimate cannabis with products that have microbial contaminants, which produce toxins and can be dangerous. While health is a top concern, it unfortunately isn’t the standalone. If a cannabis distributor or retailer is attacked by counterfeiters, it could damage the brand’s reputation and loyalty. Ultimately, this hurts the business’ bottom line in the longterm. The cannabis industry, despite legalization, is already facing stigmas and (understandably) hefty regulations. Thus, it’s difficult to build a strong base of loyal customers and reputation is the primary consideration for driving sales. Authentic sales boost credibility and reliability, which is something critical to consumers using marijuana products. How does VerifyMe track e-commerce goods versus brick & mortar? Is one more at risk for counterfeiting than the other? In the cannabis industry, most sales are done through brick-and-mortar locations. However, the pandemic has pushed people to make purchases online, boosting e-commerce sales activity. While both sales methods are at risk for selling
Cannabis Prospect Magazine | April 2021
fraudulent goods, it can be easier for bad actors to disrupt supply chains through online purchases. This is because there’s an added layer of inspection when products enter a retail establishment, whereas products sold online simply arrive at a consumer’s door. The cannabis industry faces challenges when it comes to advertising and marketing – does authenticity serve as a primary factor of driving sales? Boosting reputation/loyalty? Authenticity is absolutely a factor of driving sales. While this stands across industries, it’s even more critical for growing markets such as cannabis. In one of the most hyper-competitive markets today with limited ability to publicly advertise, cannabis distributors face extreme scrutiny, regulation and competition to not only bring safe products to the market, but also build and retain customer loyalty. Since many countries and regions are unable to market cannabis the same way a sneaker company could, for example, it’s extremely difficult (but mission-critical) for brands to build up their reputation and keep sales high. For brands to be able to confidently claim that products are authentic – and put these same authentication opportunities in their customers’ hands – this instills a layer of trust and boosts credibility. What’s the long-term solution to counterfeiting, especially in the cannabis industry? Brands need to take advantage of innovative solutions and really let technology do the legwork in stopping fraudulent sales. We’ve seen major retailers, like Amazon, make massive investments into combating counterfeiting – mostly requiring added staff to analyze sellers and inspect products. Leveraging automated technology helps save corporate dollars from being used for hiring teams dedicated to authentication and other fraud protection strategies. Counterfeiting is a dangerous threat, and we need to ensure measures are in place to prevent fraudulent goods from getting into supply chains. If we don’t, consumers and brands alike will be at risk. Patrick White is the CEO of VerifyMe.
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The Art of Cannabis: How Established Musicians Are Helping Artists During the Pandemic By Raine Maida, Co-Founder and Director, LOOP/POOL
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OVID-19 has affected every aspect of our lives. From how we travel to how we eat to how we educate our kids, absolutely everything in North America has been upended and disrupted for more than a year. When you mix in the human toll of this pandemic — more than 500,000 Americans and 20,000 Canadians have died as a result of the virus — it’s not an exaggeration to say that 2020 will go down in history as annus horribilis. And even as we begin to pull out of the darkest days of this pandemic, 2020 will have lasting repercussions for years,even decades. Professional musicians have been hit hard by COVID. Thanks to government-mandated shutdowns and social-distancing rules, it’s been all but impossible to play live shows and in the absence of concerts, there are few ways to sell merchandise, build up a fan base and engage with supporters. Many established musicians have been able to weather the storm by streaming performances online and releasing new albums, but that only works if you already have a following. For new bands, the pandemic has been catastrophic. That’s why I am so excited to be one of the founders of LOOP/POOL. LOOP/POOL is a Canadian company that does two things. First and foremost, we make and sell high-quality cannabis products, but second is the “secret sauce” that led to the creation of this company: we use the proceeds from our sales to support musicians who have been affected by the COVID-19 pandemic. In fact, our company was cofounded by a number of prominent Canadian musicians in all genres, not only to launch a consumer cannabis brand, but also to help the next generation of musicians create amazing work, even during a perfect storm that is literally preventing them from doing their jobs. There is obviously a lot of consumer choice in Canada, and from day one our goal was to offer the highest-quality products to customers who use cannabis. We’ve built up some great relationships with licensed producers, and with our products hitting shelves very soon we are committed to using 10% of the proceeds from all of our product sales to support new artists. That’s especially important right now because the primary channel for getting visibility isn’t an option right now in most of North America. I’m just one of a number of Canadian musicians who are part of this great company, and what we have in common is a passion for great cannabis and a passion for helping our fellow musicians succeed. These
COMPANY PROFILE
artists include Roy Woods, Blue Rodeo, Felix Cartal, Stars, dvsn and Kiesza. Also, our CEO, Ian Kwechansky, has a long history of working on the management side of the music industry. It really is a “superpower” team. No matter how big a band is today, chances are they probably started out under less-than-glamorous circumstances. Despite what you see on reality shows, it’s extremely unlikely a younger artist comes out of nowhere and automatically vaults to stardom. It takes years of playing in church basements and community centres, doing Sunday afternoon bar gigs in front of eight people and spending evenings taping posters to phone poles. You’ll never see that side of the music business on American Idol, but that’s how most performers start their careers. Even during the best of times, it can be discouraging – but not being able to do those things is nothing short of devastating. I wonder how many potentially great bands we will never hear because they threw in the towel in 2020 thanks to the pandemic. It’s heartbreaking to think about what we are losing creatively. Even though I’ve been fortunate to win a bunch of awards and have multiple platinum records, I have never forgotten where we came from. Back in 1991, the band that became Our Lady Peace played our first show. And then we played another. And another. For the next three years we played in coffee houses, bars and college cafeterias. We were just one of hundreds of Toronto groups trying to achieve the ultimate dream: getting a record deal. We ended up catching lightning in a bottle, and our first album became suc-
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Professional musicians have been hit hard by COVID. Thanks to government-mandated shutdowns and socialdistancing rules, it’s been all but impossible to play live shows and in the absence of concerts there are few ways to sell merchandise, build up a fan base and engage with supporters.
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Caption (left page): Photo of Raine Maida. Taken by Matthew Guido. Caption (below): Picture of LOOP/POOL’s cannabis line.
cessful and set the stage for nearly 30 years of recording and touring. All of those early gigs allowed us to refine our sound, get better as a band, develop new material and develop a fanbase that allowed us to break through. Unfortunately, the COVID-19 pandemic has made it impossible for today’s up-and-coming bands to have the same opportunities that we did. And it’s devastating for them. That’s why I and my fellow artist founded LOOP/POOL to help bands get the exposure they need, even if they can’t play live shows. In many ways, this reflects the ethos of what cannabis is supposed to do: help people relax, have fun and have amazing experiences. It’s hard to think of the Summer of Love or the Age of Aquarius without thinking about the role that cannabis played. There has always been a link between cannabis use and music, and I like to think of LOOP/ POOL as the latest link in a long tradition. Of course, you don’t need to be a cannabis user to make (or listen to) music, but there’s no denying that there’s a powerful connection. And along with this connection comes a responsibility for established musicians to lend a helping hand for the next generation to reach their goals and live their dreams. Raine Maida is the Co-Founder and Director of LOOP/POOL, a Canadian artist-focused, social-forward cannabis brand. He is also the lead singer of the four-time Juno-Award winning band Our Lady Peace, which has sold several million albums around the world.
April 2021 | Cannabis Prospect Magazine
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FIVE RISK MANAGEMENT TRENDS CANNABIS BUSINESSES SHOULD WATCH FOR IN 2021 By Jay Virdi
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espite the COVID shutdown and associated ripple effects, the Canadian cannabis industry continues to grow at a record pace. Not only is the industry worth an estimated $2.2 billion in annual retail sales, but March 2020 actually saw an increase in sales, as Canadians stocked up on extra cannabis products to help them through a stressful time. The big story for 2021 is the evolution of the industry – and the pain points looming ahead. Market data shows producers are stockpiling cannabis. For example, data from Health Canada shows roughly nine million packaged units available in April, compared with just one million in sales. At the same time, consumers’ preferences are maturing. No longer are customers focused solely on THC percentages. Today they are exploring a variety of terpene profiles, which affect the smell and taste of the product and affect the overall experience. Of course, a critical component of the whole picture is a proper risk management structure, with full coverage from R&D to daily operations. This includes appropriate coverage for outdoor cultivation, which is set to surpass indoor and greenhouse operations. Cannabis businesses that haven’t yet incorporated risk management in their business plan will need to look into it in 2021, especially when looking to secure private equity funding. As the second-fastest growing industry in Canada, maturing at more than 28% annually, cannabis sales are not likely to slow down. Experts predict continued growing pains – and gains – to shape the industry in 2021.
and deliveries. At the same time, with government offices closed for months, cannabis operations that hadn’t yet obtained a licence were left in limbo. In some cases that meant raised capital was pulled and funding ceased. For start-ups that want to apply again in 2021, it’ll be an uphill climb. During routine COVID-19 inspections in 2020, officials found a host of other issues at cannabis operations, including incorrect labelling, poor safety and health practices, lack of PPE compliance by staff and customers, incorrect counting of cash and more. In some cases, these visits resulted in regulatory fines and shutdowns. In 2021, a rising number of employment practices liability (EPL) claims are arguing that employers didn’t adequately protect the employees. These accusations dovetail with another major charge often levied against fast-growing businesses — lightning speed growth without the necessary business operations and risk management tools to support it. With rapid growth comes great risk, and many cannabis businesses have not procured appropriate liability insurance coverage to match those risks. In many cases, there are also health hazard exclusions, which can limit liability coverage or even exclude losses altogether. Whether it’s D&O and EPL policies as in the case above, or Cyber, Environmental, Property or General Liability (GL) policies, it’s critical to think more holistically about insurance coverage. Cannabis operations must work with an insurance broker that specializes in the industry and understands different operations and business location, as exposures can vary greatly.
1. COVID-19 will continue to advance cannabis industry growth — with a few roadblocks. The COVID shutdown brought opportunities and obstacles for the cannabis industry. On the one hand, many retail outlets and dispensaries remained open throughout the pandemic as “essential businesses,” adopting new ways of serving customers, from curbside pick-up to drive-through windows
2. Legalization of edibles is looking for a do-over. When edibles became legal in October 2019, experts had expectations for something big. Since so many potential customers are put off by smoke and other health concerns, some were predicting that the edibles market would overtake the rest of the cannabis market. Then COVID hit, derailing the rollout of a wide variety of new prod-
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Cannabis Prospect Magazine | April 2021
ucts and start-up companies. As 2021 begins, hopes are high again that the derailment will turn into a simple delay. When it comes to new edibles products, the most significant exposure may be product labelling. The regulations from Health Canada outline the requirements for labelling cannabis products, including edibles, beverages and even topicals. Organizations that don’t follow those guidelines may wind up in trouble. Staying on top of the regulations can be challenging, but working with an insurance broker familiar with the industry can help guide organizations to meet those labelling requirements and avoid the risks. 3. R&D extraction dangers lead to greater risks. Extraction R&D will be a major focus for cannabis organizations in 2021, as cannabis extractors continue to experiment with new ways to apply existing methods with butane, ethanol and CO2 as well as innovative methods adopted from the agriculture industry, using water and light exposure and different nutrients for extraction. The search for a superior product becomes a potential liability when cannabis extractors modify the use of existing equipment for a different type of extraction. Flammable products are often used, and explosions are common. If you are considering experimenting with R&D, engage your insurance broker to ensure the risk is covered within your existing policies and to explore best practices for experimentation and varying equipment use. 4. Risks of outdoor cultivation lead to the growth of parametric insurance. Canadian growers harvested more outdoor cannabis than ever before in 2020. With so many new factors to consider – nutrients, pest control programs, wind mitigation, genetic programs – there was a big learning curve. But the biggest challenge may be those factors beyond human control. Whether it’s an early frost or a wildfire, outdoor cultivation brings with it some real perils, and traditional crop insurance
isn’t available for cannabis cultivators. There just isn’t enough data yet on cannabis crop yields for the traditional solutions to kick in. Meanwhile, the growers are assuming all the risk. The best protection so far may be parametric insurance, a program that pays out after a certain parameter is met. For cannabis crops, those parameters are weather-related, such as rain, wind and hail. If you are concerned about weather events negatively affecting your yields, work with your broker to develop an appropriate parametric insurance plan that identifies the appropriate strike points. 5. An industry growing by leaps and bounds requires appropriate property protection. As the cannabis industry matures, it’s important that organizations carry appropriate coverage to protect their property. Property insurance covers vandalism and theft, as well as any weather-related threats that can destroy a cannabis facility. Fires are especially common. For example, many grow operations have had fires related to faulty grow lights. Canopy Growth had a fire at an unused greenhouse in early November. In each case, the plants are destroyed – along with your profit. When looking for a new property insurance policy, or even preparing for a renewal, underwriters are cautious about taking on unnecessary risk. They will be looking to learn about your equipment. Doing your homework ahead of time can ease the renewal process and make it easier to find appropriate coverage. 2021 Growth and Beyond The good news is cannabis growers and producers are doing the right things, and much will remain the same in 2021. The industry is continuing to grow and change in spite of the supply and demand challenges and the necessary re-launch of the edibles market. For all cannabis businesses, 2021 will be about building on what they’re already doing and preparing for what will hopefully come next. Jay Virdi is chief sales officer for Hub International’s cannabis insurance and risk services in the U.S. and Canada.
Contact the Cannabis Expert! Lars Rittmann
Commercial Account Executive Email: LRittmann@erb-erb.com Phone: 1.800.265.2625 ext. 1213
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LABELLING
Four Ways Cultivators Can Improve Efficiencies with Cannabis Labelling By Travis Wayne, Product Manager, TEKLYNX Americas
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ue to the COVID-19 pandemic, growth in 2020 wasn’t as large as everyone expected. But as the market became more stable and expanded internationally, and as Health Canada grants more cannabis licences in 2021, the market will continue to grow. As one of the most robust and organized cannabis programs in the world, software strategies can enable better seedto-sale traceability throughout Canada and help cannabis organizations grow and gain a competitive advantage in 2021 and beyond. Here are four ways to keep your cannabis business competitive in 2021 with label software strategies for seedto-sale traceability. Integrate from the Onset Many software applications are needed across the cannabis supply chain for cultivation, inventory management, point of sale (POS) and more. Barcodes are an integral part of this process as they are the carrier to streamline communication of data across these points in the supply chain. They also regularly report required information, per the Cannabis Act, such as cultivation volume, packaged and unpacked inventory and sales, to name a few. But there are many! Integrating barcode labeling software into your seed-to-sale technology stack will remove manual steps in your labeling process, reduce errors and related risk and speed your time to market. RFID for Real-Time Tracking & Inventory Radio Frequency Identification (RFID) is a technology that uses tiny tags to track and identify objects that the tags are attached to. RFID tags are a very small chip with a very small antenna that can communicate data to a reader that can be embedded in a label, product or package. Leveraging RFID technology in seed-to-sale traceability begins in the cultivation stage of the labeling process, when the seed hits the soil and allows for real-time tracking of plants that can greatly reduce your overhead inventory.
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Manually scanning barcodes can add inefficiencies and added spending to your labeling process whereas an RFID reader can produce real and measurable benefits. With RFID tags, the reader does not need a direct line of sight to read the tag. Similarly, the readers are able to scan hundreds of tags in a matter of seconds. They also enable accurate real-time inventory analysis with fixed RFID readers on shelves that allow automatic item counting and location tracking. While investing in RFID technology carries a higher upfront cost, the savings continue to compile year after year. Establish a Secure Label Approval Process In any regulated industry, you cannot risk bad labels entering a production environment. A preventable measure to ensure this doesn’t happen is defining user roles in your labeling process. Establishing role-based user permissions can significantly decrease errors and ensure your process is always running smoothly and cohesively. Label security and traceability software enables a streamlined process for label design, storage, approvals and printing to support compliance in any industry. Pro Tip! In your cannabis label de-
sign process, make sure your labeling is being done in-house and on-demand. This is a great place to save time and money because it allows a speedier time to market with no lead-time for labels. On-demand labeling allows you to leverage a database of your hi-resolution company and product graphics to variably populate data onto labels in real time. This leaves your company branding to you and not in the hands of a third party. Centralize your Labeling Operations for Better Visibility Centralizing your labeling operations allows organizations with multiple locations better visibility throughout your company. Simple web-page publishing means having the ability to print everywhere, from anywhere, with the necessary approved labels. Printing from one centralized and secure location allows standardization across locations and is very easy to scale, leaving room for potential business growth. Pro Tip! Reduce manual steps through automation. There is always 2
a demand to eliminate manual steps in processes to increase efficiencies. Automating label printing allows you to print labels instantaneously without manual data entry, reducing bad labels from entering production and saving you money. Automating printing can be done by collecting data from devices such as scales, scanners, keyboards and more, increasing print speeds and reducing label waste. The cannabis industry is consistently growing as cannabis licences continue to be granted into 2021. As one of the most robust and organized cannabis programs in the world, software strategies can enable better seed-to-sale traceability throughout Canada and help cannabis organizations grow and gain a competitive advantage in 2021 and beyond. To learn more about how you can improve traceability from seed to sale, visit www.teklynx.com. To learn more about TEKLYNX, visit www.teklynx. com. 3
1 4 5 6 Health Canada. (2019, December 9). Packaging and labelling guide for cannabis products [Photograph]. https://www.canada.ca/en/health-canada/ services/cannabis-regulations-licensed-producers/packaging-labelling-guidecannabis-products/guide.html
Cannabis Business Times. (2017, September 29). Fathom and Gimbal Demonstrate Automated Bluetooth Plant Tracking in Cannabis Cultivation Facility [Photograph]. Www.Cannabisbusinesstimes.Com. https://www.cannabisbusinesstimes.com/article/ fathom-gimbal-demonstrate-automated-bluetooth-plant-tracking/
Cannabis Prospect Magazine | April 2021
SPONSORED CONTENT
MEDZ CANNABIS INCORPORATED
WHO WE ARE
By Karly Marsico, VP of Business Development for Medz Cannabis Inc.
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edz Cannabis Inc. (“Medz”) is a privately-owned federally licensed producer of cannabis located in Toronto, Ontario. As of today, Medz Cannabis possesses a standard licence to cultivate, process and sell cannabis in accordance with The Cannabis Act and its Regulations. Our team would like to take this opportunity to introduce our mission and goal within the cannabis industry. Medz is equipped with an incredibly versed team, with each member bringing a unique value-added asset. Over the past two years, the team has moved quietly but swiftly to perfect the execution of our business model. Based on industry trends, it’s no secret that the market has become saturated with product, driving prices down and demand for high-quality and high-potency products up. This consumption pattern has left many volume-based LPs with minimal time to pivot their model, forcing most to sell off their stock. With careful analysis of these trends, the causes and their effects, Medz has executed an innovative and flexible business model to hedge the market volatility. We are proud to announce our ongoing progress in the cannabis space. Our Cultivation Division is designed to produce premium hand-craft small batch cannabis with incredible terpene profiles and targeted potency levels. Our Director of Cultivation, Luis Hoxha, comes with +10 years growing medical-grade cannabis, and is excited to introduce his flower to industry connoisseurs. Furthermore, Medz has spent just over a year preparing for the rollout of our Processing Division. We are excited to announce our collaboration with key companies that specialize in processing techniques that derive high-quality 2.0 products. Medz has worked diligently on hand-picking partners that will bring the highest standard of product to consumers. To name a few, we are introducing The Hash Corporation, an in-
credibly versed hash processing team switching over from the legacy market. Fritz’s Edibles, a highly-specialized edibles team also transferring from the legacy market to the regulated space. 6Pak solutions, a unique co-packing company focused on helping LPs and brands bring products to market faster and more efficiently. 6Pak is a sister company of ATG Pharma, an industry leader in filling and packaging equipment, bringing state-of-the-art automation equipment and capabilities to the Medz facility. Additionally, Medz is proud to announce the collaboration with Glow LifeTech, an innovative biotech company that is leading the advancement of highly-specialized technology and processing practices. Glow focuses on producing next-generation, science-backed cannabis-based ingredients using their breakthrough MyCell™ Technology; a plant-based, pharma-grade drug delivery system which transforms cannabinoids and other plant-based active compounds into enhanced, water-compatible concentrates with dramatically enhanced bioavailability, absorption and effectiveness. As a whole, Medz is proud to house these brands and work collaboratively to execute to market. As of today, Medz is the first LP to obtain their Retail Operator License, one of two licenses required to open up a farmgate retail store on-site. Our team is working diligently with AGCO to obtain our full set of licenses and open doors in the Summer. Our on-site dispensary is built out, and ready to become a home to our in-house crafted brands, allowing customers to meet the ‘farmers’ and truly understand the product they are buying. We will continue to inform and announce to our partners, customers and competitors, our progress and success. Medz is extremely excited to introduce ourselves to the cannabis industry.
WHAT EVERYONE SHOULD KNOW ABOUT BLOCKCHAIN AND HOW IT WILL AFFECT THE CANNABIS INDUSTRY
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ike everyone else on the planet, I hear about blockchain and cryptocurrency, and I wonder if there’s anything I should do to help my clients get ready for the changes that will affect our industry. To be completely transparent, I am not a technology guru, nor am I involved in that side of the industry. Blockchain is a blind spot for me. I know very little about it, so I called an expert to learn more. Robert Galarza is the Chief Executive Officer and Director at TruTrace Technologies, and he’s at the forefront of leveraging blockchain to help the cannabis industry. His efforts are garnering a lot of attention from both the industry and the stock market. He has more than two decades of experience developing enterprise software that makes sense of large and dynamic data. Robert explains Blockchain as a vast database, a growing list of records called blocks. Each block contains a cryptographic hash of the previous block, a timestamp and transaction data. A blockchain is resistant to modifi-
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By Neal Claassen
cation of its data, because once recorded, the data in any given block cannot be altered retroactively without alteration of all subsequent blocks. But like any database, the quality of information you can get out of it is only equal to the quality of information that is put into the blocks. The promise of blockchain is that because it’s so resistant to modification of data. It’s a great tool to verify the authenticity of any product, and cannabis is no exception. Robert points out that the medical cannabis industry is the early adaptor of blockchain technology, which makes sense since it needs tools to ensure efficacy for its patients. Shoppers Drug Mart has a pilot program in Canada and the University Health Network is working with 12 licensed producers to implement blockchain. The most important argument for verifying authenticity in the recreational market is that there’s still fierce competition between the legal and illicit markets. The main reason
Cannabis Prospect Magazine | April 2021
behind legalization is precisely to eradicate the illicit market, which isn’t regulated and doesn’t play by any rules. The illicit market is a dangerous and unscrupulous competitor, for example, it can add any number of compounds or pesticides to its product. The problem for the legal market is there’s little to no standardization in how cannabis is described outside of THC or CBD content, and even then there’s variance in how that is reported. Cannabis is highly variable from batch to batch, yet many producers will simply publish average descriptions to cover multiple batches. To describe batch variance further, Robert cites the following example. It is often a case where an operator cultivates a product with an expected chemical output that varies from what was expected from the genetics themselves. Hence “Blue Dream” #1 is cultivated with (THC 14%; CBD 2%) with a minor cannabinoid/terpene/flavonoid format of “ABCD.” Then “Blue Dream” #2 is cultivated with (THC 14%; CBD 2%), but with a minor
TECHNOLOGY
format of “DABC” creating a different effect for the customer or patient.Customers will go onto Weedmaps to locate a desired product and identify that product using a name, like Purple Kush, which really provides zero information about the product. Compounding the problem is brokered cannabis, whereby a licensed producer will purchase cannabis seeds or biomass from another producer through a broker. A cultivator (farm) would generally be purchasing seeds or clones, and a vertical producer would likely be purchasing post-cultivated flower or biomass for extraction. In either case there is ample opportunity for substitution and diversion. Producers generally only care that a batch test within a range, but how is a consumer supposed to be confident about that? Robert goes on to explain that to achieve brand consistency, we need critical detailed cannabinoid data, which starts with genetics. This information should be standardized across the industry as a whole. In the U.S., “The Dosist” is a producer that Robert singles out as a brand with excellent practices that could be adopted industry-wide, but it will come down to the resolve of regulators to make this reality. Once this critical detailed cannabinoid data gets recorded in blockchain, we have the potential to pull away from the black market. A detailed level of information will allow growers and retailers to have meaningful communication with the market, and marketing restric-
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tions will then start to fall away, which is what everyone wants. To understand how blockchain is being applied to products it’s important to understand that there are three types of blockchain: open, permission and private. A private blockchain is managed by a single entity, and may be used to protect data and intellectual property. A permission blockchain has contributors by permission across a select group of companies and individuals. This is where most of the development work takes place. An open blockchain is as it sounds, open for all to contribute. The thing to remember with all of these
“The most important argument for verifying authenticity in the recreational market is that there’s still fierce competition between the legal and illicit markets. The main reason behind legalization is precisely to eradicate the illicit market, whose practices aren’t regulated and they don’t play by any rules.”
Cannabis Prospect Magazine | April 2021
is that the quality of the information out is only as good as the quality in. I asked Robert about digital currency, which essentially places a speculated value on information. It’s possible that someone may try to create a currency on cannabis information, but we are a very long way from that at the moment. In summary, blockchain has real potential in the cannabis market. It can help growers and retailers communicate with the market, it can help ease restrictions on cannabis marketing, and it can help the legal market pull away from the black market. To get there, Robert has a call to action for all consumers, retailers and growers alike: We must demand more accountability from our regulatory bodies to provide critical, detailed and standardised cannabinoid data to ensure a safe product.
Robert Galarza (above) is the Chief Executive Officer and Director at TruTrace Technologies. Neal Claassen is the Business Development Officer for Sevenpoint Interiors.
CULTIVATION
EVOLVING TRENDS IN CANNABIS PRODUCTION, PRODUCT POSITIONING AND SUPPLY-CHAIN MANAGEMENT
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By Buck Young
t’s no secret that the cannabis landscape in Canada is hyper-competitive. The promise of legalization included the notion that the industry would serve as a home for cannabis pioneers, creating an abundance of choice for consumers, and building on the product innovation and quality of this Canadian legacy. The industry however was largely financed to the tune of billions of dollars based on business models, which focused on scale rather than the pursuit of that legacy. According to government statistics, cannabis flower inventories totalled roughly five months of sales and monthly production has exceeded monthly demand in every month since the legal industry was created. In the cannabis extract segment, the numbers are even more stark; eight months inventory and 200% monthly production vis-a-vis sales. The reality is there’s too much total production in the marketplace, but again, that’s no secret. Does that mean every producer should be downsizing production? Certainly, we have seen corrections. In the aggregate, the industry has lost a third of its workforce in the last year, primarily attributable to substantial production consolidation among major players. Canopy, Aphria and Aurora all mothballed flagship massive-scale greenhouse projects, and outdoor production of cannabis has been largely a failed experiment. That said, it might have served its cynical purpose by allowing companies to conduct massive financings on the back of forecasts, which assumed that this production would have a home. This supply glut caused a wave of financial difficulties in late 2019 and 2020, with several dozen companies entering creditor protection, engaging in major restructuring or simply closing up shop. It’s fitting that bankers place trophies in their board rooms for deals they have brokered, that they refer to as ‘tombstones’. The irony is that the
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Cannabis Prospect Magazine | April 2021
deals these tombstones commemorate, saddled many companies with financial and operational liabilities that the ‘markets’ (read investment banks) deemed a sound investment thesis, but ended up ruining the prospects for long-term profitability. However, the capital markets have facilitated ‘success’ stories as well. Those companies that have loads of cash, trade at a massive premium, even with profits far from realization. Canopy announced it will not have positive free cash-flow until 2024, with no timeline on profitability or earnings, and its stock price went up. What’s going on here? Much like Amazon and Uber, you don’t need to turn a profit to maintain a high-market capitalization if the reason you are unprofitable is to garner market share. A recent leak of the BCLDB price list posted on Reddit gives insight into what’s at hand. Many large corporate players are selling cannabis at below a sustainable price point. There’s no other way to characterize this practice as anything other than anti-competitive. Product dumping is widespread, as many companies have written off billions in losses on inventory. It could be argued that this trend is serving to accelerate the capture of the black market, but it would be irrational to assume that Canopy intends to continue losing money selling cannabis. Once the pressure campaign has pushed out those producers without the luxury of operating for a decade at a loss, cannabis prices at the wholesale level will increase. But the squeeze will continue, shifting its focus to the retail space. Canopy has secured retail access by obtaining control through franchise agreements, skirting the intent of ownership limitations aimed at preventing corporate consolidation of retail with production. Even the KPMG-supervised retail lottery in Ontario resulted in an
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Cannabis Prospect Magazine
allocation of initial licences seemingly skewed favourably to major players by virtue of family members and business associates of executives garnering a large share of licences. How all this shapes up remains to be seen. Alcohol is a useful analogue given the dominant position held by major producers going back a few decades. In the end, despite their best efforts, beer and wine became a much more competitive marketplace, partially due to regulatory changes in the supply chain, and partially due to consumer behavior. An experienced wine sales exec once told me, if it weren’t for VQA designation on wine in Ontario, a local producer status which grants a lesser retail markup compared to imported products, the wine region in Ontario wouldn’t exist the way it does today. We are seeing the beginning of a similar trend as evidenced by the announcement of a craft designation by Ontario Cannabis Stores (OCS). Although a craft designation does not lower the markup OCS places on cannabis, it does facilitate listings and logistics for small volume SKUs. This is an explicit acknowledgement that structural advantages benefit larger operators in ways that threaten a competitive market, consumer choice and product quality. At the end of the day, consumer purchasing behavior will ultimately be determinative. We are already seeing a bimodal sales velocity curve with high-end and low-end products being the key driver for sales, demonstrating demand for products across the quality and price spectrums. Whether you are a consumer, bud tender or retail store manager, take a moment to consider what kind of marketplace you want to see in the future, and how your actions may contribute or detract from that goal in the long run. Allow me to suggest that it should be our shared mission to connect consumers with our proud Canadian cannabis heritage, to tell the narratives about the products we create, and to emphasize the business practices we choose to bring them to market. It’s a marathon, not a sprint, and those with a long-view will help shape a more vibrant and profitable industry. Buck Young is the cofounder of CannTx Life Science Inc.
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Cannabis Prospect Magazine | April 2021
May 26-27
ACCESSORIES
NEW U.S. LAW CREATES SHIPPING PROBLEMS, INCREASED REGULATIONS FOR CANADIAN VAPE PRODUCERS By Jim Dissett
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anadian vape hardware providers wanting to engage in the U.S. market will face new challenges shipping products and complying with strict new reporting requirements as a result of a little-known act buried within a December 2020 law intended to combat the economic impact of the coronavirus pandemic. The Preventing Online Sales of E-Cigarettes to Children Act, which was signed into law by then-President Donald Trump in December, modifies a 1949 law to effectively categorize all components and elements used in ANY vaporizing device as a cigarette. More specifically, anything that vaporizes a substance that may be inhaled is now considered a nicotine delivery device in the United States whether or not it is intended to be used for nicotine. The new designation forces shippers to comply with stringent rules, including registering with the U.S. Attorney General, as well as maintaining and reporting addresses and quantities of products. Of urgent concern to vape producers are the new regulations regarding shipment of vape products, according to Dana E. Shoched, CEO of U.S. vape manufacturer O2VAPE. The law specifically restricts vape hardware and all of its subcomponents from being shipped through the United States Postal Service (USPS), which will cease delivery of all vape products beginning April 26. Lobbying efforts by anti-vaping groups have spurred UPS,
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Federal Express and DHL to announce similar shipping bans for imports, exports or domestically across the United States. Vape hardware providers will no longer be able to use their traditional shipping partners. All business will need to be done through private carriers. “In the U.S. legal cannabis market, the vaping component of our industry drives billions of dollars in revenue and creates thousands of jobs both here and elsewhere,” Shoched said. “This law misrepresents vape customers as nicotine addicts and all vape technology as tobacco driven, which effectively destroys vape producers’ ability to serve customers with safe and responsibly produced equipment. This heavily restricts the totality of the North American market and will likely drive consumers very quickly into the black market.” A veteran of the U.S. Navy, Shoched founded O2VAPE out of her garage in 2012. Prior to creating O2VAPE, Shoched held numerous roles in the pharmaceutical industry, healthcare and sales in the private sector. Shoched is widely recognized as a pioneer for woman-owned businesses in the cannabis industry. “The thing I’m most concerned about is how this law will choke the supply chain for the equipment that many of my fellow Veterans and other medicinal cannabis patients around the country use to take their medication,” Shoched said. “Like so many other responsible vape producers, we have worked hard
Cannabis Prospect Magazine | April 2021
to get where we are by always putting the safety of our customers first. Most important to us, this will force consumers into a dangerous black market that was shown to be the source for many of the lung disease cases in 2019.” Changing the act will require action from the U.S. Congress or favorable interpretation of the law for non-nicotine based vape companies. In the meantime, businesses like O2VAPE and hundreds of others will be searching for alternative shipping methods to best serve clients while ensuring they remain compliant with shipping regulations through any channels remaining. Many in the industry and even many state Attorney Generals remain unfamiliar with the implications of this act, as Shoched explains. “So, right now our first step is to inform the industry and stakeholders so we can then work with them to find proactive and compliant business solutions,” she said. “We just hope it can be done quickly before patients are driven to a black market because supply chains get cut. Sadly, this may just be the most dangerous legacy of this ill-considered act.” Jim Dissett is a Colorado-based writer and Chief Communications Officer for The 9th Block, a branding communication firm focused on the cannabis, technology and healthcare industries.
RETAIL CANNABIS FORUM MAY 13, 2021 | 1PM – 4PM
CREATING NEW OPPORTUNITIES IN RETAIL CANNABIS RCC’s Retail Cannabis Forum will explore the newest trends and best practices in cannabis retailing. Hear from cannabis retailers about creating immersive brand experiences, new marketing strategies, educating consumers, and finding the best talent. VISIT WWW.RETAILCOUNCIL.ORG/WEBINARS/RETAIL-CANNABIS-FORUM TO VIEW THE FULL AGENDA AND TO REGISTER.
PROVINCIAL UPDATES
Ontario
According to the most recent quarterly sales report from the Ontario Cannabis Stores (OCS), in the third quarter of this year, 30,000,000 grams of legal recreational cannabis valued at approximately $251,100,000 were sold in Ontario, an increase in volume of 16% over the previous quarter. Physical stores represented 88% of sales in the province with 25,900,000 grams versus the online channel’s sales of 4,100,000 grams. Dried flower continued to lead, with just over 57% of sales, followed by vapes and pre-rolls, at 15.7% and 12.5% respectively, with edibles making up 4.5% of all cannabis sales. According to recent updated stats from Statistics Canada, monthly sales totaled $727.49 million in Ontario between the months of January and December ‘20.
Manitoba
According to a recent article in the Winnipeg Free Press, a new motion calls for city staff to explore potential new rules to ban medical cannabis cultivation entirely in residential areas or limit the number of plants that can be grown in each house. The public service should also provide zoning bylaw options to regulate or prohibit nuisance odours or any other “health hazards” from homes where cannabis is being cultivated, according to the motion developed by Couns. Ross Eadie (Mynarski), Janice Lukes (Waverley West) and Devi Sharma (Old Kildonan). The motion also asks city staff to explore ways to regulate ventilation, electrical and other building systems to minimize odours, moisture, mould and any other impact of pot growth.
Quebec
The Société québécoise du cannabis (SQDC) ended its 16-week third quarter on January 2, 2021. During the quarter, it recorded sales of $173 million, a $62.2 million increase from the third quarter of the preceding fiscal year. The company also reported net income of $23.3 million for the quarter, compared with $11.6 million for the same quarter in fiscal 20192020. According to recent updated stats from Statistics Canada, monthly sales totaled $495.68 million in Quebec between the months of January and December ‘20.
Saskatchewan
Delta 9 Cannabis Inc. announced it has introduced new services to meet consumer demand for online ordering in all retail markets it serves. Delta 9 has now launched a province-wide delivery service in Saskatchewan and same-day home delivery service program to the Lloydminster, Saskatchewan marketplace. According to recent updated stats from Statistics Canada, monthly sales totaled $135.9 million in Saskatchewan between the months of January and December ‘20.
According to recent updated stats from Statistics Canada, monthly sales totaled $99.71 million in Manitoba between the months of January and December ‘20.
Alberta
According to an article in the Calgary Herald, a proposed end to a ban on manufacturers buying favours from retailers is being embraced by Alberta’s cannabis industry as a way to break what they call marketing shackles not imposed on the booze sector. But many in the province’s alcohol industry have voiced opposition to Alberta Gaming, Liquor and Cannabis’ proposal to end the prohibition on inducements, or what those in the industries call “pay to play,” that currently stops producers from purchasing prized spots in stores. While they say doing away with inducements could unfairly tilt the playing field to producers who can better afford to pay for them, many players in Alberta’s cannabis industry view the change as a way towards less regulation and more power to advertise.
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Cannabis Prospect Magazine | April 2021
British Columbia
According to the British Columbia provincial website, Policy Directive 21-03 references minor changes to the Cannabis Retail Store Terms and Conditions handbook including clarifying the collection of donations for charity, viewing cannabis transactions by minors and details about restrictions on shopping bags and gift bags. According to recent updated stats from Statistics Canada, monthly sales totaled $369.97 million in Saskatchewan between the months of January and December ‘20.
Prince Edward Island
According to recent updated stats from Statistics Canada, monthly sales totaled $15.84 million in Prince Edward Island between the months of January and December ‘20.
Nova Scotia
The NSLC released its third quarter financial results today (September 28 -December 27, 2020), reporting a 14.3% increase in earnings for a total of $74.9 million. Total sales for the quarter were $210.0 million, with beverage alcohol sales of $187.8 million and cannabis sales of $22.2 million. Cannabis sales increased by 27.5% during the quarter. The NSLC added six new cannabis stores to the network and the cannabis market is maturing, which has resulted in a 23% decrease in the average price per gram, to $7.58, and a stable supply of the larger package sizes customers are seeking. According to recent updated stats from Statistics Canada, monthly sales totaled $80.76 million in Nova Scotia between the months of January and December ‘20.
Newfoundland & Labrador
Zenabis now has distribution deals in all provinces and territories, the company announced in late March. This includes concluded agreements with Cannabis NL, a division of the provincially-owned Newfoundland and Labrador Liquor Corporation. Shipments under the new agreements will commence in April. According to recent updated stats from Statistics Canada, monthly sales totaled $143.32 million in Newfoundland & Labrador between the months of January and December ‘20.
New Brunswick
In early March, Premier Blaine Higgs was urged to stand down on making a decision on Cannabis NB until he has consulted with businesses, residents, Indigenous groups and others. A six-page letter, signed by Assembly of First Nations Regional Chief Roger Augustine and nine New Brunswickbased cannabis businesses, pressed Higgs and Finance Minister Ernie Steeves to “pause any further decision or negotiation regarding Cannabis NB.” Higgs had earlier said a final decision on whether to privatize the Crown agency would be made by the end of 2020. In late December, a Finance Department spokesperson said the process “would continue into the new year.” According to recent updated stats from Statistics Canada, monthly sales totaled $68.22 million in New Brunswick between the months of January and December ‘20.
Yukon / Northwest Territories / Nunavut According to recent updated stats from Statistics Canada, monthly sales totaled $736,000 in Yukon Territory and $896,000 in the Northwest Territories between the months of January and December ‘20. Sales figures for the territory of Nunavut were unavailable.
April 2021 | Cannabis Prospect Magazine
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PRODUCTS SPOTLIGHT
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3M™ Petrifilm™ Plate Reader Advanced
3M Food Safety today introduces the 3M™ Petrifilm™ Plate Reader Advanced, a new automation technology that gives food safety professionals new options to rapidly and accurately image, count and document microbiological colonies on 3M™ Petrifilm™ Plates indicator tests. The new 3M Petrifilm Plate Reader Advanced is a small, peripheral device containing a five-megapixel camera and versatile bar code reader. The device utilizes fixed artificial intelligence networks to enumerate 3M Petrifilm Plates. 3M Petrifilm Plates are inserted into the device, with imaging and information automatically displaying on a USB-connected computer in less than six seconds, processing up to 900 plates per hour. The device can enumerate 10 3M Petrifilm Plates and the Staph Express Disk and includes software that allows technicians to edit results and add other relevant sample information. A study conducted found up to 94% reduced time to enumerate 3M Petrifilm Plates when using the 3M Petrifilm Plate Reader Advanced.
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Chemistry Diaphragm Pump MD 4C NT
VACUUBRAND’s MD 4C NT diaphragm pump produces higher product yields, maximizes production output, and improves your extraction process. This low-maintenance pump is a great solution to support applications such as rotary evaporators and purge ovens because it is oil-free, has a high chemical compatibility, and has high pumping speeds in the relevant vacuum range. Finish steps faster, more safely, and with better purity and potency with the MD 4C NT diaphragm pump. Learn more at: http://bit.ly/MD4CNTPump
Cannabis Prospect Magazine | April 2021
3 Branding Bud by David A. Paleschuck
Breaking new territory, “Branding Bud” (brandingbud.com) offers a comprehensive overview and contextualization of this new segment, examining the multitude of emerging brands, their creative assets and the strategies behind them. Published by legendary cannabis expert Ed Rosenthal’s publishing house, Quick Trading Publishing, the book touches upon the political and legal history of cannabis; consumer segments and means of consumption; and how that has informed the legal cannabis brand landscape developing today. Leveraging the most up-to-date industry research, branding and marketing expert David Paleschuck takes a critical look at the current state of legal US cannabis products, packaging and consumption. The book is available on Amazon for pre-order.
4 CRATIV Accelerator Product Line
Beginning January 2021, Cannasupplies will be stocking the CRATIV Slim and CRATIV Original sizes manufactured using a new food-grade FDA approved biodegradability enhancing additive. The CRATIV accelerator additive helps naturally present enzymes in landfill environments to infiltrate the molecular structure of the material in order to break it down quickly. An important difference compared to other solutions in industry is that CRATIV’s additive does not depend on sunlight or oxygen to degrade and thus is more dependable. CRATIV is pursuing industry recognized ASTM D5511 landfill environment testing. In about a year after participating in the ASTM D5511 testing, CRATIV will be able to report the biodegradation performance.
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APPOINTMENTS
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48North Cannabis Corp. has announced the appointment of Kirsten Gauthier as Chief Growth Officer. Since launching 48North, Kirsten has been responsible for overseeing the Company’s rapid growth. Going beyond her duties as Chief Marketing Officer, Kirsten has also been responsible for the Company’s sales, product development and human resource functions. Prior to joining 48North, Kirsten built a successful career as an entrepreneur, She has founded several graphic communication companies, as well as Good Foot Delivery, a social enterprise courier service offering employment opportunities to people with disabilities.
urban-gro, Inc., a global horticulture company that engineers and designs commercial Controlled Environment Agriculture (CEA) facilities and integrates complex environmental equipment systems into these high-performance facilities, has appointed of James H. Dennedy as President and Chief Operating Officer. Mr. Dennedy is a seasoned professional who brings with him extensive operational, financial, executive and organizational experience. Mr. Dennedy has served in multiple executive roles and as a director for both public and private companies.
JMCC Group Chair & CEO Diane Scott announced that the company is building a state-ofthe-art distribution centre on the Channel Island of Jersey to serve medical cannabis patients in the United Kingdom and business partners in the European Union. The move makes it the first private Canadian medical cannabis company to own its entire plant-to-patient supply chain. JMCC European Distribution Limited is a joint venture between JMCC (Canada) Corp as majority owner and Jersey’s Green Island Growers Ltd., a local producer of high-quality medicinal cannabis.
Kason Corporation, a global manufacturer of screening and processing equipment for multiple industries, has appointed Seth Vance as President. Vance joined Kason after a successful tenure as Chief Operating Officer at Timber Automation (TA), a manufacturer of custom sawmill equipment, control systems and optimization technology. He also previously worked at Danaher Corporation, most recently serving as Global Business Director of the Claros Water Intelligence System. He has extensive experience with industrial equipment and instrumentation as well as complementary software, and Internet of Things (IoT) applications.
AgraFlora Organics International Inc. has announced that Elise Coppens has been appointed as AgraFlora’s new Chief Executive Officer (CEO). During her career in the Canadian cannabis industry, Ms. Coppens’ roles have included but are not limited to serving as President of Bloomera, Marketing Director for Aurora Cannabis and the Director of International Sales for Ample Organics.
The Company announced that its board of directors has appointed Sean Bovingdon as Chief Executive Officer (CEO), and member of the board, effective immediately. Mr. Bovingdon had previously been appointed as Interim CEO in November 2020 while continuing to serve as CFO. He will continue as interim CFO while the Company undertakes a search for a permanent Chief Financial Officer.
Mind Cure Health Inc., a leader in advanced proprietary technology for psychedelic therapy, announced that it has named Tarik Lebbadi as the Company’s new Chief Operating Officer. Mr. Lebbadi steps in to assume the role previously held by President & CEO Kelsey Ramsden. He is an accomplished international executive and operator with extensive experience in healthcare and technology, having served in a leadership position at Johnson & Johnson and at several high-growth technology companies. Most recently, he served in a strategic operational capacity at Aurora Cannabis through the industry’s legalization.
Christina Lake Cannabis Corp. (CLC) has appointed Rob Jones as the President of CLC to lead its commercialization efforts beginning in 2021. Mr. Jones has been promoted to this position from his role as Executive Vice President of Business Development and Sales for CLC. Under Mr. Jones’ leadership as President, CLC believes it can form a robust sales pipeline for its goods within Canada and potentially in international markets. Before joining CLC, Mr. Jones was Director of Sales and Marketing for West Coast Reduction, Ltd. (WCRL), the largest independent rendering operation in Western Canada.
Cannabis Prospect Magazine | April 2021
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Advertiser Index Buddi................................................................................................19 Cannabis Council of Canada............................................................33 CannTX Life Sciences (Royal City Cannabis Co.).........................36 Diablo Nutrients.................................................................................5 LMI Canada Insurance.....................................................................15 Fanshawe College.............................................................................15 Greenline POS.................................................................................21 IndicaOnline......................................................................................7 MarigoldPR......................................................................................25 Medz Cannabis................................................................................17 MJBiz...............................................................................................33 Retail Council of Canada.................................................................27 Sevenpoint Interiors...........................................................................2 Spiritleaf...........................................................................................11 Taima Extracts..................................................................................35
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Cannabis Prospect Magazine | April 2021
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